Guest Blog: Retirement Planning | The Frugalista

Guest Blog: Retirement Planning

by frugalista on June 21, 2010

Hello, my Frugalistas! I missed you! I have a guest blogger today, writing about retirement. After all, a lot of projections say that our generation will have to work when they are in their 70s, and I’m trying to fight that every day! Retirement savings are a beautiful thing! Say it loud. Say it proud!

Anyway, here’s a guest post from Marina Shifrin, a personal finance and consumer-interest story writer at mybanktracker.com . Marina says she appreciates her job not only for the income, but for opening her eyes to world of finance.

Here’s Marina’s post!

RETIREMENT 101

When I head to work in the morning, my head is clouded with many questions: Who will I fall in love with on the subway today? Where should I go for happy hour? What just brushed up against my leg?

The last thing on my mind as a 22 year old, brand-new college graduate is retirement planning. As each year passes by with a depressing amount of speed, and after accepting a position with mybanktracker.com I decided it was time to confront retirement planning square in the, uh, face? One problem: I don’t know ANYTHING about retirement planning. So I decided to find a solution the same way I do for 99.9% of my problems: turn to the internet.
Working for mybanktracker.com has many perks, one of which is the wealth of knowledge you can find. I did a quick search and found this article about saving for retirement early. It had great tips and resources for young, business minded, individuals. I particularly liked the link to a retirement plan calculator, but shameless plugs aside I am here to reach out to people like me. People who think about the future but just need help to get the right path. This is why I put together some important information from what I read:
1. 401K
You have probably heard this term before because it is one of the most popular ways to save for retirement. It is a plan that offers tax deductable contributions, tax deferred growth and taxable distributions. As long as you have some type of employment you can establish a 401K.
To protect your money, it is best to establish a rollover 401k, which basically lets you transfer your existing retirement funds into another retirement account without penalty.
Although this article was written last year, I found it very helpful on explaining 401k roll over options: How to Roll Over Your 401(k) When You Leave or Lose Your Job – The 401k Rollover .

2. IRAs
IRAs are similar to 401ks but the difference is that they are individually sponsored as opposed to employee sponsored. That means you are the one in charge. The two types of IRAs are traditional IRA and Roth IRA.
Traditional IRA most resembles are 401k with tax-deferred growth meaning you only pay taxes on the money when you withdraw in retirement. Traditional IRAs also have different options for choosing a type.
Roth IRA doesn’t have the option of tax deductable contributions but offers tax-free growth.
There are different regulations to be eligible for these IRAs. To learn more visit The IRA Advantage.
3. What do I do?
* Start saving! That is the first thing necessary for retirement planning. You should be saving 10-15% of your income as a 20 year old to be able to comfortably retire.
* Start investing! The above options explain how to plan for retirement through investing it would be wise to schedule an appointment with your bank or employer to figure out the best plan for you.
* Start reading! Yeah, thinking about grown up things isn’t fun, but being an adult is expensive. The more you know about it, the more you will be prepared for those expenses.

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